Long-Term Fiscal Plan Offered With No Income Tax and No PDF Cap
March 22, 2017
(SitNews) Juneau, Alaska - After listening to the concerns from Alaskans, the House Republicans say they are offering a comprehensive fiscal plan with no income tax and no Permanent Fund Dividend cap. Acknowledging the good work done by both bodies and the administration, the House Republican's proposal is striving to reach a compromise that protects the economy and preserves the PFD. The plan calls for a spending cap, phased cuts over four years, and the use of Permanent Fund earnings within a sustainable and structured framework that protects and grows the Fund.
"This plan offers the biggest PFD checks for Alaskans while keeping our economy strong," said Finance Leader Lance Pruitt (R-Anchorage). "During a recession, it's essential to keep money in people's pockets and allow their income to flow through the economy."
Over the next four years House Republicans propose $600 million in cuts, a $4.1 billion spending cap, and a 5.25% POMV draw with 50 percent of the draw going towards Alaskans' PFDs.
This year's PFD could grow to $1,900 and in 10 years be as large as $2,300. Modelling shows that by Fiscal Year 2026, House Bill 192 protects and grows the Permanent Fund while providing for essential services without depleting the Constitutional Budget Reserve.
"It is our responsibility to Alaskans to ensure the Permanent Fund remains permanent," said Representative Steve Thompson (R-Fairbanks). "This plan represents a balance of smart spending reductions and effective use of state savings."
House Bill 192 differs from other plans by prioritizing the health of Alaska's economy and strengthening the private sector.
"If you listen to some of the rhetoric, you'd think that the only way to address the fiscal gap is by taxing," said Rep. Charisse Millett (R-Anchorage). "House Bill 192 preserves the Permanent Fund, ERA, CBR, and uses our existing assets without taking from Alaskans wallets."
Monday House Democrats, and those aligned with them, moved forward with HB57, an operating budget that House Republicans say ultimately hurts Alaskans by growing government, lowering value in the permanent fund and relying on an income tax not in place.
HB57 increases state agency operations by $8.3-million over the Governors amended operating budget. The House Republican members say they are strongly opposed to growing government at a time when budgets need to be shrinking to fit the state's decreasing revenues. Alaska House Republicans said they hoped to have an honest discussion about cuts but instead their voices, and in turn, the voices of more than 300-thousands of Alaskans were silenced.
"This budget takes $4-billion from our highest earning interest account which will result in a loss of hundreds of millions of dollars." Says Representative Tammie Wilson (R-North Pole) about HB57. "I cannot stand behind a bill that jeopardizes the dividend and requires an income tax to fill the budget gap."
In House Finance the House Republican members offered over $200-million in agency operations savings. House Finance Member Representative Steve Thompson (R-Fairbanks) says a major concern he has with HB57 is the raid of permanent fund earnings.
"That account is our state's biggest interest earning account. Taking from it is like using your retirement savings when you have other money available. It's essentially robbing from our future," says Rep. Thompson.
"While we have reduced spending $3.3 billion since FY15 the details tell the real story. Nearly $2-billion of those reductions were from the capital budget and only $400 million from agency operations." Says Representative Cathy Tilton (R-Wasilla). "$400 million in reductions is possible because we have operated under those levels in prior fiscal years."
This budget does not provide a plan for the sustainability of Alaska which is why every House Republican present Monday opposed HB57.
House Bill 192 is currently sponsored by Representatives Pruitt, Thompson, Millett, Chenault, Talerico, Birch, Kopp, Johnston, Johnson, and Knopp. It was referred to the Finance committee on March 22nd.
House Bill 57 is being held for reconsideration on March 27th.
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